Clubs waging war on wages

Premier league wages have dropped for the first time, according to the latest into the wealthiest league in world football.

The findings from Deloitte's annual financial review into the game suggest that, with a few exceptions, crazy pay-days are coming to an end.

Analysts believe that the three per cent reduction could bring about a golden era for the game, as clubs become increasingly innovative in writing contracts.

The report shows that the salary levels are topping out after a staggering increase since the inception of the Premiership 14 years ago.

The average salary still hovers around the £800,000-mark but the reduction shows how the elite in English football are now trying to keep their financial houses in order.

The report comes on the heels of last week's European Union warning, backed by Sports Minister Richard Caborn, that predicts a doomsday scenario unless spending is curtailed.

But it does not take into consideration the mind-boggling contracts signed by Michael Ballack and Thierry Henry, or the one on offer to Andriy Shevchenko.

Alan Switzer, a consultant from the Sports' Business Group at Deloitte said: "There have been signs that it has been going this way for a couple of years and, of course, it will have a positive effect with respect to clubs' overall financial stability.

"They are putting together shorter contracts, performance-related pay and other mechanisms whereby they can control the costs of employing players. They are moving towards balancing the books and paying the players less is obviously a good sign.

"If you take Chelsea out of the equation — they lost £140m during the last financial year — then Premiership clubs actually made a £62m profit. The warning came with Leeds United. Clubs across Europe took note of what happened to them.

"Since then, it is looking increasingly positive for a lot of the others. There is a new television deal on the horizon and wages are down. They still have a way to go, but they are definitely on the right lines."

'Crowds are holding up, despite the publicity about empty seats'

When the new television deal kicks in during the 2007-2008 season, revenue will rocket from £1.3bn to £1.7bn and financial commentators suggest that the real test of whether football has put its house in order will come then.

"Historically, players' wages have risen once the improved television deals are in place," added Switzer.

"What we consider unlikely to happen is that the level of increase is as high as it has been in the past."

However, analysts believe that football, if it can contain the wages it pays to players, may be about to enter a boom time. Fourteen clubs recorded a pre-tax profit and that could improve.

Switzer said: "Crowds are holding up, despite the publicity about empty seats. It's mainly because the stadia are a lot bigger.

"Wages are down and the broadcasting revenues are on the increase. There are a lot of big sponsorship deals that will also have an effect, such as Arsenal's with Emirates, Samsung with Chelsea and Mansion with Spurs."

Wages rose in the Championship, which continued its growth to remain the sixth-biggest league in Europe behind the Premiership and its counterparts in Italy, Germany, Spain and France.

THE KEY FINDINGS

• The average salary has risen from £85,000 to £800,000 since the Premiership began in 1992.

• During the past decade, wages have risen by about 20 per cent a year.

• Premiership clubs are now the most profitable in Europe — 14 declared pre-tax profits.

• German clubs fared better in wage reduction, slashing their bills by eight per cent.

• The £601m tax bill would be enough to fund the building of 10 new hospitals.

• Newcastle United and Fulham were the only clubs in the top ten whose wages and salaries increased during the year 2004-05.

• The Premiership clubs' average salary bill for players is £39.3m. If Chelsea's figures are excluded, the average drops by a staggering 10 per cent to £35.6m.